AI – Will it Help the Financial Planning Process? Or Even Replace it?

When it comes to AI, I think it’s important to recognise both its capabilities and its limitations. Do I think AI is going to completely take over and change everyone’s lives as we know it? That remains to be seen, but fundamentally, I would say no. If you think back to when personal computers became more prominent in the 1980s, or when the internet began to take off, there were similar levels of excitement and fear as to how our lives would change for ever. However, whilst we might not be able to imagine life today without apps, computers, smartphones, digital communication in its myriad of forms, social media and online shopping, I’m not sure you can argue this is a wholesale change to human existence – humans still interact with each other to get things done.

On the upside, I believe AI has the capacity to support and enhance the work we do, but by no means is it a replacement. One of the most obvious benefits is efficiency. AI can help speed up the delivery of services to clients, and allows us to streamline our processes. It enables us to optimise working routines that would otherwise take significantly longer. AI is a great tool for automation and organisation, whether it’s assisting with note taking, or producing summaries it can be highly effective when used correctly.

That said, as a firm, we would not let AI completely control the advice we give. We are a financial planning team made up of professionals with years of knowledge and experience of how financial decisions affect the lives of our clients, something we consider fundamental to our business. We use our skills to help clients identify their financial objectives, not just framed by mathematical targets, but on how it will affect their life. Without that knowledge and experience how would we know if the programme driven solution was wrong? And I’m not sure there’s much fun in our team resisting from learning to think critically for themselves.

From a client’s perspective, there are also clear benefits to consider. For example, using AI to clarify information or explain complex terms can be helpful for many. I see no issue with clients using AI as a secondary source, whether it’s to explore an idea further or to better understand a point we’ve discussed. Really, it’s no different from reading a book or article and then returning with questions.

In fact, I view this kind of engagement as a positive. We actively encourage questions, but the reality is that many people hesitate to ask them. It could be because they’re unsure how to phrase what they want to say, or because they lack the confidence to challenge or explore a topic further. Sometimes, with the use of AI, it’s possible to bridge that gap by giving people a starting point. It can prompt more open and informed discussions, ultimately leading to a better client experience.

In some cases, it’s even led people to seek professional advice! We work with a client who was initially unsure about the type of advice they needed and how to navigate the different options available, but after asking Chat GPT a couple questions, they were directed to us. Without that initial step, they may not have taken the next one.

I listened to a podcast involving Rory Sutherland, the Vice Chairman of Ogilvy UK, in which he talks (to paraphrase) about the idea that AI will replace human interaction, but then argues that goes against our fundamental evolution. From running around as hunter gathers and having to look someone in the eye and judge if they are correctly informing you that it’s safe to go somewhere or eat something, to reading the unspoken signals given off by someone’s body language.

I am now in danger of making this topic quite philosophical, but it does all come back to a simple point. Whilst AI has a role to play, it’s not a replacement for the human element of our profession, or any profession for that matter. As a business, we will use what we believe are its strengths to enhance what we do, and we’re happy to limit it to that.

I’m sure there’s still a lot we don’t know about the full impacts of AI, but for me it feels like it can be a force for good, as long as it’s used responsibly. AI is still growing, and we can’t just take everything it tells us at face value. This is especially true for younger generations, who will probably feel the brunt of its effects. Helping them build critical thinking , communication and analytical skills should be essential, so you stand out from the AI, especially with so many new forms of media constantly emerging. Education systems play a big role here, but that’s a bigger conversation for another time. For now, it’s something worth keeping in mind as we learn to live alongside AI.

There is also the question of who might make money from AI, and is the current tech spend justified? Again I don’t think there is a convincing answer here given the pace of evolution, but I am reminded there is only really one dominant search engine, or workplace operating system, yet there are currently a whole lot of companies trying to become the dominant large language model….they can’t all win!! Coming back to human nature, people tend to find something they are happy with and stick with it rather than constantly switching between different options.

I’d welcome any thoughts people have on this subject as we are all very much in a learning curve, and I’m excited to see what positive outcomes could come from it.

Colmore Partners is an Appointed Representative of Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority, the registration number is 223112.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

Colmore Partners is not responsible for the accuracy or content of third-party sources.

This article has been reviewed and approved by Best Practice IFA Group Ltd for publication. The views and opinions expressed are those of Colmore Partners and do not necessarily reflect the views of Best Practice IFA Group Limited.